This Argentina Real Estate report examines the commercial office, retail, industrial and construction sectors throughout the country amid a deteriorating business environment. The investment landscape remains uneasy and we expect the Latin American nation to continue to be plagued by economic and political pressures.
With a focus on the principal cities of Buenos Aires, Cordoba and La Plata, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government financing restrictions on a market already expected to slow over the year. In July 2012, we conducted our most recent round of in-country interviews, which found the commercial real estate sector to be holding up relatively well. Nevertheless, initial signs of weakness are beginning to emerge - particularly in the retail sector - and the impressive growth in the real estate segment over the last decade does look set to grind to an imminent halt.
Key Points:
- We are maintaining our expectation for a sharp downturn in Argentine construction industry value growth in 2012 - underlined by leading indicators showing a slowdown is starting to take hold. Growth in 2011 came in largely in line with expectations at 9.1%, however, we believe that the deterioration of the business environment coupled with economic mismanagement is beginning to unravel growth across strategic industries. We are, thus, forecasting 2.8% growth in 2012, with downside risks.
- While news that Argentina's government is forcing insurance companies to invest a portion of their holdings into infrastructure poses further questions about Argentina's business environment, it is good news for a cash strapped infrastructure sector. The government has made a number of moves to force investment into the struggling sector, which should supplement growth in 2013.
- Popular opinion has turned against President Cristina Fernández de Kirchner, her government and their policies, leading us to believe that the Peronist-led coalition will lose seats in the 2013 legislative election. The magnitude of the loss will depend on just how effectively the opposition can blame Fernández for a deteriorating economy - a large loss has the potential to hobble the Peronists until the 2015 election, when the centre-right opposition could make a strong campaign for the presidency.
- The Argentine government's increasingly aggressive interventionist policies have caused us to revise down our 2012 real GDP growth forecast from 4.0% to 3.0%. Additionally, we now believe that persistent economic imbalances in the Argentine economy will lead to a sharp reduction in economic growth and a significant devaluation of the peso in 2013. We are also revising down our 2013 real GDP growth forecast from 3.7% to 0.9%, after which point we believe the effects of a 25% devaluation in 2013 will pave the way for stronger growth for the remainder of the decade.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Argentina Real Estate Report Q1 2013
